Investors are being sought for the development of the UK’s first purpose-built underground warehouse, which is expected to have an end value of £300m.
Formal Investments has started the process to secure investment to build the 2m sq ft facility in Hounslow, TW5, that was granted planning approval this week. Savills and CBRE are advising the developer.
Discussions have also begun with occupiers, who are expected to pay rents similar to other big box assets in proximity to Heathrow Airport of around £11 per sq ft.
The project sits on a site alongside The Parkway (A312) and Bath Road (A4) known as Rectory Farm.
Formal Investments has an existing investor base, however the scale and originality of the development means it will likely attract a broad range of institutional investors.
The warehouse could be up to 13m deep. The exact cost of the construction will largely depend on the depth of the warehouse, which could be tailored to occupiers’ needs, but could reach £200m.
Some of the development costs will be offset from the sale of gravel that will be excavated from the site.
Once funding is in place, work could begin in 2018 and complete in seven to 10 years.
Formal Investments director Nicholas King said he first came up with the idea for the underground warehouse 10 years ago.
“I was 23 then and now this project has become a growing part of my career. Getting planning for a site is an achievement, particularly for a new concept like this one.”
With rapid urbanisation and the rise in e-commerce and increased demand for inner city logistics, the sector is looking for more innovative solutions for storage space.
Earlier this month, e-tail giant Amazon filed a patent for an underwater warehouse.
Depots would be submerged in lakes, reservoirs and purpose-built pools, with items summoned to the surface with acoustic vibrations.
Bridget Outtrim, director at Savills, said: “Occupiers are becoming more and more innovative in the automated systems they use in their warehouses.
“This opportunity to offer large-scale space to an occupier is unconventional. Rectory Farm demonstrates the large range of opportunities there are to create storage space – we don’t have to use the same old institutional designs that have dictated terms for occupiers.”